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THE AFTERMATH

CLIENT TALKING POINTS

THE AFTERMATH

Last night’s debate touched on myriad topics ranging from the economy to the fiscal cliff to job creation. This morning, polls show that Mitt Romney was the clear “winner” of the debate. For anyone who missed it, Mitt was aggressive, well-spoken and was not afraid to offer a retort to accusations from the President. Considering that Obama hasn’t really had to truly face off against anyone in almost four years, it makes sense that he was a little rusty. 

This is exactly what Mitt Romney needs to do in order to win the election in November. He must continue to be aggressive and offer solutions to the American people that will fix the economy. If Mitt wins, things across all markets will change provided he keeps his promise of firing Ben Bernanke.

MANIC MEDIA

The media loves a good headline. Hype gets people watching and those eyeballs attract advertising dollars. These days, the financial media is all about sensationalism and shooting firm whilst asking questions later on. They are anxious to report on Bernanke, Draghi, and anyone else who may move the markets. It seems like every week there’s a rumor or someone was “overheard” discussing a bailout, increasing stimulus measures or something of the like. The market follows suit accordingly and then calms down after realizing these reports are nothing more than pure speculative reporting. The media is certainly manic these days; when will they calm down and report just the facts?

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ASSET ALLOCATION

Cash:                DOWN

U.S. Equities:   DOWN

Int'l Equities:   UP   

Commodities: Flat

Fixed Income:  DOWN

Int'l Currencies: UP  

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TOP LONG IDEAS

BRINKER INTL (EAT)

Remains our top long in casual dining as new sales layers (pizza) and strong-performing remodels (~5% comps) should maintain sales momentum. The company is continuing to enhance returns for shareholders through share buybacks . The stock trades at a discount to DIN (7.7x vs 9.3x EV/EBITDA) and in line with the group at 7.3x.

  • TRADE:  LONG
  • TREND:  LONG
  • TAIL:      LONG            

PACCAR (PCAR)

Emissions regulations in the US focusing on greenhouse gases should end the disruptive pre-buy cycle and allow PCAR to improve margins. Improved capacity utilization, truck fleet aging, and less volatile used truck prices all should support higher long-run profitability. In the near-term, Paccar may benefit from engine certification issues at Navistar, allowing it to gain market share. Longer-term, Paccar enjos a strong position in a structurally advantaged industry and an attractive valuation.

  • TRADE:  LONG
  • TREND:  LONG
  • TAIL:      LONG

UNDER ARMOUR (UA)

This company’s on track to post $3Bn in revenues by ’14 – impressive given a $1.5Bn print in 2011. Perhaps more impressive is the breadth of growth drivers that will get it there – women’s, accessories, new underwear platform etc. in addition to footwear. UA is gaining share in both apparel and footwear quarter-to-date. While some may be concerned over the loss of UA’s SVP/Sourcing we’re 8% ahead of the Street in the upcoming quarter and buyers on weakness.

  • TRADE:  LONG
  • TREND:  LONG
  • TAIL:      LONG

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THREE FOR THE ROAD

TWEET OF THE DAY

“Romney probably uses murray's pomade, his hair doesn't move..” -@ZorTrades

QUOTE OF THE DAY

“There is always a well-known solution to every human problem--neat, plausible, and wrong.” -H.L. Mencken

STAT OF THE DAY

ECB holds main interest rate at 0.75%.